DAS & WiFi Contracts for Venue Owners

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2014’s Gold Rush – Venue DAS and WIFI Contracts

Exclusivity is Paramount

Consider the following quotes:

“At of the core of our growth strategy is the acquisition of long-term wireless rights at large venues. As data demand continues to grow unabated, these are the locations in which users and carriers will run headlong into the capacity crunch. By securing venue rights and installing small cell networks, both DAS and Wi-Fi, we provide the additional capacity to help carriers and venues, keep pace with demand and deliver optimal customer experience.” – Boingo Earnings Call

“A consistent theme for every piece of real estate that we controlled was privity and exclusivity, which we believe were critical to our success. We didn’t want to have investments in real estate where people could build over the top of us.

With relationships we formed with utility companies and rooftop owners and with investments made in indoor and outdoor DAS in those venues we always had exclusivity. Exclusivity allows us to have honest conversations with our customers. We wanted to be in the site solution business, but we also had to be pragmatic about it and control the real estate. That’s the business we’re all in today, we are in the real estate business.

We focused on having unique locations and unique partnerships with property owners and utility companies that gave us the opportunity to have unique conversation, a private conversation, with our customers about those locations.” – Marc Ganzi (previously CEO of Global Tower Partners

In both quotes, you can see the similar theme- that it is paramount to these companies success that they secure the long term rights to venues. Both companies either currently seek or did seek to insert themselves between the venue owner and the wireless service providers. In doing so, they could control the monopoly that comes from the exclusive control of large venues over their interior space.

To put this in perspective, historically, the wireless service providers weren’t that concerned about wireless use indoors. Their users primarily used their wireless devices outside when they weren’t attached to a network or weren’t close to their traditional landlines. However, today, 80% of wireless usage occurs inside. Wireless data use has been climbing at rates of 60-120% year over year and 2014 is not expected to be any different with expectations that the average user will use 120% more data than they did in 2013. In other words, consumers and businesses are now turning first to wireless and secondly to wired connections.

The wireless service providers recognize this, the DAS and tower companies realize this, but venue owners are slow to arrive at this conclusion. Venue owners typically fail to see that provision of wireless services to inhabitants of their venue is no different than providing electricity or plumbing. So when the DAS providers and tower companies come calling seeking to tie up exclusive rights to the venue, they think of it simply as ancillary revenue- instead of seeing that they are giving up control over a fundamental utility.

The Gold Rush is Happening

As part of our database, we track DAS installations across the US at airports, subways, stadiums, college campuses, hospitals, and other large venues. We can say without a doubt that the vast majority of venue owners are entering into exclusive lease agreements with the wireless carriers or neutral hosts. The wireless carriers, DAS neutral hosts, and the tower companies are actively contacting every large venue they can trying to convince that venue to enter into an exclusive agreement. They do this because they know that eventually the wireless carriers will come calling seeking to install their own DAS. Venue owners are receiving multiple proposals often with high lump sum payment offers in lieu of ongoing lease payments.

The wireless service providers and the neutral hosts are willing to make these offers because they know that if they get the exclusive rights, that they can enter into favorable agreements with the wireless service providers to not only lease access to the venue but also pay a capital contribution to fund the development of the DAS in the venue. To put it another way, the “neutral hosts” not only get the exclusive rights to sublease access to your venue, but they get the rights to make the wireless service providers pay for the construction costs of the DAS. So the “neutral host” gets the right to build a system in your venue and have someone else pay for it, and then gets the opportunity to collect lease payments. All in your venue.

What the Wise Venue Owner Should Consider

Venue owners often believe that DAS or wireless use inside their facility is too complicated for them to manage. It is complicated, but there are many independent firms in the market (including Steel in the Air) that can help the venue owner evaluate all their options. These options include funding and constructing the DAS themselves, entering into an agreement with a wireless service provider to install and manage the system, or even enter into an agreement with a neutral host to build, manage, and sublease the DAS. The key though is that the terms of the agreement have to be the most favorable to the venue owner, not to the “neutral” host or the wireless service provider.

The DAS should complement the venue’s own public safety and communications needs, not detract from them. It should be expandable and unobtrusive, just like your electrical system and plumbing systems. It should be future proofed, so that it meets not only the current needs of the venue’s tenants and visitors, but future needs as well. And first and foremost, it should recognize the exclusivity that the venue owner holds over the venue instead of granting exclusive rights to a third party.

We Can Help

We are the only company that is focused on assisting venue owners and property owners with evaluating DAS proposals and that has legal and engineering expertise in DAS agreements. We will help you understand the options available to your venue. We can help you pull the proverbial gold out of your venue, instead of leasing the mining rights to the neutral hosts or wireless service providers.